there would be some naysayers with the pmi. let's look at what happened in february. that perhaps clouded what happened. it was also the small and medium-sized companies. especially new export orders. david: and they are getting that. markets are ignoring the bed data out of japan and south korea. yvonne: take a look at what we are seeing. plenty of green on the screen when it comes to stocks. the csi 300 once again reigning supreme. up more than 2% and shanghai. we already saw a 29. --29% rally. that was the best quarter we have seen since 2014, just before he got into that equity bubble. wheres coming at a time analysts are sounding the alarm

when it comes to earnings. more than 80 companies have had a sell rating from analysts or a bearish report. they are seeing that perhaps this rally has not had enough steam. we are seeing today it has been the data. fundamental signs of stabilization. most of what we have seen has been sentiment-driven. japanese yen selling off. perfect reflection of the risk appetite. we are seeing pickup in yields once again. global bond rally is easing a bit. we mentioned the hang seng. we mentioned china taking the number one spot when it came to q1. take a look at the hang seng. now clear into a bull market territory. 502.level to watch is 29 on that level perhaps we will enter into a bull market. a lot of momentum. this coming at a time where we

saw hong kong perhaps outshone by china. take a look at the shanghai composite price change versus the hang seng china enterprise index. it basically beat out hong kong by north of 10%. perhaps there is some room for catch up for hong kong, a lot of other markets that were beaten up in the first quarter. perhaps more room for a catch-up. that is the equity front. we will talk through with our guest. well.day for bloomberg as . the bloomberg barclays global aggregate index. chinese bonds being included in that. having its global debut today. we will be talking about the implication of this milestone for china. let's get you caught up with the first word news with su keenan from new york. su: we start with the latest on brexit.

theresa may's conservative party is planning for a potential snap election with just 12 days to go until u.k. potentially crashes out of the european union. the house of commons will take control of brexit later monday, seeking a plan that would seek a majority in parliament. so ministers are calling for a hard split with no deals and others threatening to resign if that happens. isly is being warned there no money for populist spending plans with growth grinding to a halt. the economy has expanded a than itse point less eu peers for 10 years and will as evengrowth in 2019 germany has slowed down. australian property prices continue to plummet last month.

it was harder to maintain financing. some buyers delayed purchases until after the upcoming election. sydney is leaving -- leading the slump with prices 14% lower than their peak just two years ago. malaysia has resumed the case against the only suspect in the death of kim jong-un's half-brother. he remains in the dock after another woman was abruptly relieved last month. wipingpect is accused of the lethal nerve agent on kim's face at take a while the import airport in february 2017. the charge says the suspect acted in collusion with north korean aspects -- asians -- a gents.

she said she was tricked into carrying out a prank for a reality tv show. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. chinese equity markets of 2%. yields up five basis points. manufacturing sector showing signs of a sharp turnaround giving the impression -- stronger-than-expected, 50.8. rishaad: a positive picture painted by the official numbers. the biggest jump in something like seven years or something ridiculous like that. this is quite something. i'm going to put the caveat. i started off saying that the

naysayers are going to say something about the holiday. >> you cannot forget about that but we have been looking for a stabilization. here comes along a little earlier than expected. a lot of policy measures since the second quarter of last year. expectationonds of that this is coming through now. sentiment seems to have been affected a little. all that stimulus. even know it is still feeding through the system. this is a good indication that policy is working. obviously there are reasons you could say seasonal effects, global economy is still shaky. looking -- david: too early to say all that stimulus measure might level up? we are starting to see incremental results.

trickyhat is a calibration effort. we saw the premiere saying data would be better than expected. the next question is does that mean less stimulus coming down the line. there are other things that affect that. rrr cuts, for example. i did not think the expectations on that are going to move sharply just because data improves. anybody that still had any lingering hopes of some massive bazooka of stimulus, if they had still been harboring those hopes. david: good one. f, wrapping up all the data we have. . over the weekend. richard, very nice to see you. leading up to this set of numbers we had a massive rally

in the sovereign bond market. on i guess the expectation the economy would not do well. does this data make the bond market expensive? china isi think running to a different beat compared to the rest of the world. we have had quite a substantial slowdown. it was starting significantly before the trump tariffs tantrum. it was partly generated by the government because they were worried about housing prices. so we have seen a slowdown ahead of what most people saw was a slowdown coming in the third or fourth quarter of last year. think we are not running the same lapse at the moment. it is not terribly surprising to see chinese markets start to recover. does it mean summer is coming

along soon? rishaad: you tell me. richard: i always say to ask your own questions. i used to be a politician. [laughter] in aad: and you didn't win the end. you can see why. richard: we have had a lot of stimulus in the chinese economy. the chinese have quite a few other tools. we have seen in a norma's rally in the stock market. china was really in a very deficit -- difficult position. it is too early to say it is the bottom but it might be the end of the l-shaped economy. tell us about the law and how does it apply?

richard: it is extraordinary how you suddenly have a market reversal. the u.s. markets started to come off. we did not think it was serious until december. first of january suddenly we see a turnaround. the best quarter in 21 years i think in the u.s. market. where do we go from here? there was slowing down in march so where do we go second quarter? it is tough to say the second quarter will be as good as the first. my guess is for the rest of the year we will see markets trend sideways. hopefully better for active investors and hedge funds but i think we will see much more sideways movement. on the other hand if we see the trump administration per foo -- pursue cut rates your back to the races. rishaad: stick around. let's talk other things. politics and europe.

richard will stay with us. what have we got coming up? the king of thailand rebuking the former prime minister. how it could influence a final outcome of last month's vote. david: and another hotly contested election in turkey. president aragon losing key cities in the country as everyone starts to feel the sting of a recession. this is bloomberg. ♪

david: in case you have money in south korea, some lines coming through. president moon is speaking at a meeting with senior secretaries. he is urging north korea to respond to calls. but that is a responsible to go ummitat he is calling pre-s

status. rishaad: it really does seem currently as of politics are the real alpha. ak party the ruling appears to be winning. it speaks to the popularity of president erdogan and the opposition, both claiming victory. david: let's bring in asia governing manager to talk about where we go. how big of a blow is this? >> he really invested personally in the selection. he was a former mayor of istanbul. he knows cities. he had more than 100 campaign rallies. he would update every day. he would have a rally where he

was speaking and all the mayoral candidates were behind him. he was really putting this on his shoulders. it appears istanbul is a bit unclear right now. he has lost some of the other cities and it shows most of his support now in the rural areas where his nationalist message gets more traction. rishaad: istanbul it at the is where both parties say they have won. what do we expect policy-wise from erdogan in the next few months? because we are in the midst of a deep recession. dan: that is the question. the currency took another hit. he has really been going after people who want to shorten the currency ahead of the vote. people are looking for real reforms now. i think he has for years now coming up where there is no election. where hea real period

can engage in structural reforms. the question is will he turn to populism again. is he going to pressure state run banks to issue more credit? is he going to do a lot of extension everything's on the fiscal side that will work against with the central bank is trying to do? that is the ongoing issue with turkey. these toughot take steps when the economy is going well, will you do that now while things are in trouble? so that is the big unknown. but certainly investors will be expecting some tough measures and erdogan said himself he will do these things. but will that actually happen is the question. rishaad: thank you so much, dan. let's get back to richard harris. inflation, one of the issues plaguing the economy in turkey.

you have to use the right policies i suppose and what of was that inflation will decrease with the lowering of interest rates. so you tell me. david: i don't know. at some point you have to lower interest rates because inflation is low. richard: it is not unlike the trump policy of trying to beat up the fed to push interest rates down. the problem is turkey's economy has been mismanaged. you may not get his far as venezuela but it has been mismanaged. foreign investors, and a lot of u.s. dollar debt in turkey. currency has been hit badly. i think with this election shows -- don't forget that erdogan has had a strong hand over the press. journalists have been threatened. many of thousands of people have been imprisoned. he has still had very bad results in his main centers, ankara and istanbul.

his powerbase was in istanbul. grassroots,he people are still making independent decisions. he has a problem. david: as an investor do i wait for him to go? rishaad: it would be for years he would have to wait at least. he might be forced to go. richard: with these things he will have to be pretty brave. you have to be at frontier investor who will have to look at the bottom. this is what people did in greece. this is a market that is doing so badly. greece at the end of the day had the european union to back them up. turkey does not. turkey's problem is it is basically friendless. he has tried a few movements with president putin.

turkey is basically friendless. that is a real problem for anyone. rishaad: should we move to someone else who seems to be friendless at the moment? it is the prime minister of great britain and northern ireland, theresa may. this quote from the first minister of scotland. theresa may must be the only leader in memory that tried to fall on her sword and missed. richard: did she do it on purpose or by accident? rishaad: is she going to jump or is she being pushed? richard: nobody really wants the job is why she is a zombie prime minister. she has had so many setbacks and it is still there. there is another great quote which is that he who wears the sword rarely wears the crown. it is true. the first person to go after somebody like that is usually the first person to get pushed out in the rush for her position. but nobody wants that position

because it is almost insoluble. my guess is we are still looking at a no deal. but there is an increasing consensus in parliament for some sort of link with the customs union and there is quite the possibility there may be a no deal followed by a customs union. david: so there is an agreement on a customs union? does that get rid of the worst case an area? richard: it is ironic that you have a customs deal before in the eu and you had a seat at the table and you end up with a customs union where you have to accept all the rules and you have no seat at the table. came toonic that brexit improve sovereignty and now sovereignty is actually reduced. rishaad: what is more likely here at the end of the two positives? a general election or a second referendum? richard: a's general election is very unlikely.

too many interests will be to damaged. i think a second referendum is quite likely. rishaad: and of course the ball is in the eu's court. if there is nothing by april 12. richard: it is no deal. no deal. but i think britain will come back with another offer and europe will come back. there will be a bit of difficulty but will not and here here.d rishaad: some news coming from nissan. two months before his arrest, nissan chairman carlos ghosn and the chief executive considered bringing in a new partner into the alliance joining renault and mitsubishi. pressure to make a three-way alliance irreversible. it was written they had been working over the summer so it

would be acceptable. we do not know who that fourth partner was. we will try to dig deeper. david: details are on the bloomberg terminal. we will be back in a couple minutes with a look at the japanese markets heading to their lunch break. bonds included in the global aggregate index. this is bloomberg. ♪

rishaad: let's look at the business flash headlines. surging the most in 27 years. profits were ahead of expectations. almost twice what analysts were looking for. shares up as much as 9%. the most since june of 1991.

stock had fallen sharply over the last year because of the stalling smartphone market. david: the world's largest oil producer is hiring banks. saudi aramco. it have already been rated a+. production, vast reserves and low-cost, and a conservative financial profile. it will force them to release detailed financial statements for the first time since nationalization in the late 1970's. said to be revising plans to list on the london stock exchange. layer dusting off a plan to offer shares in britain that offer prospects in iraq and egypt. the company managed to finalize proceedings. the proposed a 10% share buyback in the uae saying it's business was --

yvonne: a solid session in tokyo today. 2% gains. we are seeing some selling to the japanese yen at 111.16. bond yields have been picking up globally. let's show you some big moves in the markets. we just broke news about nissan. ghosn were at one point considering a fourth partner for the alliance. not a lot of gains after that news broke out but we are still seeing holding on the gains, more than 2%. let's show more. afterrased earlier losses announcing a tie up with alibaba. that stock one of the rare movers to the downside. according to a report, looking at not binding mobile users to two year plans once they enter

into the market. we are seeing that stock down 3%. this one searching for a second day after announcing that tie up on research for cancer. this is bloomberg. ♪ ♪ so with xfinity mobile

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♪ >> 10:29 a.m. in hong kong, 10:29 p.m. in new york. i have the first word headlines. let's start with the latest in turkey. rdogan lost control of two key cities and local elections. the opposition is claiming victory in the commercial hub of istanbul. the opposition looks certain to win the capital. state media says that erdogan's alliance has taken just over 50% of the national vote, with the main opposition camp at 38%. china says it will continue its policy of no terms on american auto parts, hoping to bring the

trade dispute to an end. china removes retaliatory tariffs. the france finance ministry said it could name an end date for the suspensions later, but for now, it welcomes the resumption of talks. the latest round of discussions moves from beijing to washington, d.c. this week. trump has repeated his threat to close the u.s. border with mexico, saying that the tension can no longer expects more illegal migrants. he says mexico must do more to whicheople heading north, the homeland security secretary has said is causing a "meltdown" on the border. the president also tweeted out that the u.s. immigration laws could be easily fixed, but that democrats don't care about crime. bangladesh in dhaka, have arrested two of the owners

of a commercial plane that caught fire and killed 27 people. they had no fire protective cases, and that the higher floors had been illegally constructed. the owners have been charged with negligence and violation of building codes, and could face culpable homicide charges. global news, 24 hours a day on air and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. chinese financial markets are taking a big move toward internationalization today, with the inclusion of the bloomberg barclays global aggregate index. bloomberg lp, the parent company of bloomberg news, owns the index. let's break down the numbers, because it is quite a watershed moment. bonds50 yuan denominated

will be included in this index, issued by the chinese treasury and 30 policy banks. the inclusion is going to be phased in, so 5% of the value of these 350 or so securities will be added monthly by over 20 monster sales until there's a hundred percent conclusion. that's $3 trillion worth of bonds that will be added. morgan stanley says expect inflows of about $120 billion. so how much money are we talking about? we mentioned that china is the world's third biggest bond market. bonds will make up about 6% of so bond index in total here, keep in mind this is coming off 0%. this is actually quite significant, and deutsche bank says we could see more

influence, up to 20% of the bond market in five years. it is not just a bloomberg that is starting this off. also looking into more inclusion when it comes to those benchmarks. we have seen foreigners piling into the market and the appeal is quite easy to see. you compare this to developed markets, obviously those have been in negative territory, and u.s. treasuries as well. chinese bond markets is where you get the better returns, and we have seen a lot more of this interest coming into chinese on low when you quite take a look at the onshore markets, so perhaps it is a good diversification play. to talk more about this, let's take a look at the bottom of your screen. we have that function where you can check out the securities, which members are now included on this index. those is charles

chang, head as asia credit, thank you for joining us on a very busy day. debt ining a foreign five years -- let's bring up this turn a little -- this terminal. foreigners, but if you look at this chart we have equities plateauing and holding the bonds and continuing to rise. what we have is the turquoise lawn -- you can see they have plateaued. opportunity. how do people actually see it? are people very excited? >> i guess, simply put, this is being seen as a significant event.

it is not necessarily generating a gold rush per se, but it is making international investors and investing institutions say that the chinese domestic bond market can no longer be collected. you think about where the markets are, the e.m. portfolios on average, globally, have underweight asia for nearly four years. on average that allocation is probably 10% to 15%, which is half of what the indices have. from the institutional perspective the real question is make chinainue to and asia, now driven largely by china, in part and parcel with that? this is quite a significant event in terms of viewing that answer to be in no in making sure institutional investors are engaged. >> it almost forces the hand.

for fund managers who aren't too familiar, how is liquidity? 350,re initially talking what is the unknown? >> there's a bifurcated market. to be sure, the asia credit market itself comprising mostly of u.s. dollar bonds, those are pretty or reasonably liquid. the domestic bond market in china, less so, but that will change. part of the reason for this exercise is determined by the government to open up the domestic bond market and improve that liquidity. that will come with more transparency and with the introduction of the international rating agencies in the introduction of international participants. it will take a little bit of time but the domestic bond market is still largely reflected with the rates, where credit risk is not being reflected. you can observe the u.s. dollar

bonds and from there you can get a sense of what's happening to the credit. >> how important is this in the internationalization of the rmb, bringing it up with other currencies? >> it is quite significant. for the internationalization of the currency, at first review was to do it through trade, so you have the use of the renminbi increasing and now with this move that will help with capital markets as well. part of the opening of the domestic bond market is driven by the overall thinking in terms thehina's capital account, grander scheme behind all of this. the use of the renminbi, you first have central banks having more women be on hand as a currency, and they are going to be looking at this market in china as a potential place to

put some of their funds. steps an important first in terms of internationalizing the currency and the domestic bond market. >> the question from our markets live blog today -- we went from doding to the bond market -- you think chinese bonds are a viable reserve option? >> i think the fact of the matter is that the chinese trade flows are becoming increasingly central in international trade, and with the introduction of the belt and road, those flows will expand over time. for the central banks, the question is whether some of that reserve currency should be on hand, and for most of them the answer is yes. it is not necessarily a replacement exercise, per se, but it is something that they see as the need into the medium and long-term. is chineseactive

exit? from a value perspective -- one thing we have to think about is that in terms of where china is in the understanding of china, it is still somewhat behind. attractive prices come from inefficiencies in the market. when the market fully allocates between china and the rest of the world, the upside would more or less be traded away. as it stands, there is still a gap. from time to time, those value differentials will merge, and from investing in china just to be clear one of the biggest investors in chinese bonds are chinese investors. there is a lot of demand where that comes from, and that is one thing to keep in mind in terms

of where china is, the demand is quite broad. >> you were talking to us during it break and you say -- might show up. what is that link? interested, who are i am also a real estate man. in terms of what happens to hong kong, there are a couple things happening in the background. her international fund managers and institutions, the bifurcation i talked about offshore is where you observe the credit risk and that means if you are going to set it up you really should have you bulk of your team in hong kong youa small team in china so can observe the domestic rates and credit risks coming from chinese institutions. is an influx of

ex-pats being hired or developed locally in hong kong, which will give some demand to prices in hong kong. the immigration department announced this a few months ago -- in the last three or four years, they saw the application for visas in hong kong go up any percent. that is going to be part of the reflection of talent being developed in hong kong as this continues. >> charles, one other question i wanted to ask -- we will get to that next time. charles chang out of the asia credit strategy. a big day today with the inclusion of chinese markets into the index. from are going to move fixed income to the world's largest oil producer getting an a plus from fitch. we will get you more on the

first public assessment of saudi aramco's credit quality. this is bloomberg. ♪

♪ lots of breaking news coming out of the palace in tokyo. we have a new name for a new era. there will be an end to the theent era, ushering in next, accompanying the ascension of the current prints. >> we are going to leave that there, but for bloomberg clients you can continue watching what's going on in tokyo. entriesalso find daily

to keep you abreast of what is happening across your trading week. let's get you caught up on the latest business flash headlines. a cosmetics maker in japan is forming a tie up with alibaba, including product develop a marketing in the first collaborative shampoo that will go on sale in september. it is the largest consumer market and is aiming to double its market overall to 15% of total sales by 2020. debatebook entering the about social media responsibility and internet regulation 10 days after the live streaming of a shooting. regulators around the world should agree on worldwide standards rather than rules being imposed a piecemeal fashion.

it is rules echoed by mark zuckerberg. >> the asia-pacific governments are stepping up the drive to fight hate speech and extremism on social media. toughlia is introducing new laws to prevent the weaponization of online platform like live streaming's of shootings. singapore is drawing up new regulations to combat the spread of fake news. >> looking at aramco, the world's biggest oil producer getting fixed ratings, a plus. >> it is the first assessment of the credit quality as it prepares for the international bond offering. let's get to our asian energy reporter to start, let's start with this rating coming nearly four decades after aramco was nationalized. what to did we learn? what is new that we now know about the company?

>> we are learning a lot about it. aramco is a black box in the oil industry, the biggest producer in the world, but a lot of people don't really know about how much money they make, what their daily operations are. we learned it is the most profitable company in the world, earnings before taxes, $224 billion in 2018. that is almost three times as much as apple and four times as much as shell. a lot of that comes from it's really low-cost in terms of drilling oil. it costs about $2.80 for every barrel out of the ground. saudi aramco has $49 billion in cash that it is sitting on, bigger than apples cash toward, maybe 10 times as much as exxon. a pretty bright picture for the company. >> that is quite amazing.

it is incredible, the financial standing. $220 billion in straight profit. they gave a the fifth highest investment-grade ever. what is holding them back? >> that's a good observation. earlier, the 224 billion dollars is earnings before taxes and other costs, and fitch said that the tax burden is very high, the kingdom looks to aramco to pay for the military, and once you scrape away that, cash from operation per barrel of oil produced starts to look more mundane, about $26 in cash from every barrel, about $10 less per barrel then shall, for example. if it weren't for the fact that -- it would get

aa plus instead of just be a plus. but the sovereign is weighing it down. >> all right. thank you for wrapping that up for us. our asian energy reporter, live out of singapore. the chinese markets are the best performers in the first quarter and are picking up. one, upe still number 2.3%, and we have a large composite up some 2%. hang seng saw the best quarter since 2009 and we are seeing further upside, 30 points up today, and of course we are watching for whether we can sustain these levels and enter into the bull market. lower,are up, bonds are especially with that china pmi data out of asia, seeing a

pickup. the chinese 10 year yield is up about five basis point. the offshore renminbi seeing a bit of strength and copper futures extending higher. this is the best proxy when it comes to commodities. some analysts are saying the party still has further to go. saying we could be seeing a little more upside now that the data is starting to turn in those pmi numbers and u.s. futures are also pretty positive. >> all right. have a look at these live pictures. -- these arean pictures out of the chinese capital where she is set to meet president xi jingping. >> this is all coming through. they will be talking about tensions that have been had between the countries. late,r tensions easing of

we have those tariffs that they have been talking about, with the opening ceremony of the new new zealand embassy in beijing, talking about a set of values where people are bound together and talking about also that there will be more tourists in new zealand from china. this is bloomberg. ♪

♪ >> it is that time, battle of the charts. enda curran against richard frost, putting their best charts against each other. >> viewers can view their charts on the bloomberg. you can be the judge of it later on. let's get things started with end of. upthe chart we have pulled captures this big shift story,ng in the payment the trade war -- the perfect assessment. you that we are not just seeing it bottoming, but in acceleration, the key manufacturing economies of japan and you can see it in the bottom right. momentum is heading in the right

direction and importantly they are also heading in the right direction here. if you want to gauge sentiment, look no further than asia and china. >> rick? chart is also a happy chart. what we are showing the -- we had a great start to the year for the shanghai and hong kong stock indexes and then they got held about a month ago, the shanghai composite had this intraday hike that it has not reclaimed until today, and the hong kong hang seng index also broke through that. it is now poised to enter a bull market, and at the start of the year everything was back at and this hass

actually been a pretty boy and year for investors. in the last month it has been like a pinball machine, the index ricocheting between those two levels. it's a very bullish sign that it has broken out with a lot of people looking to see whether china's government is going to allow this rally to continue. >> this is a toughie. >> my chart is driving his chart. more of a a bit predictive quality and that is the reason why i am going for rick. >> it is tough. and that has a point, that maybe we get a little more out of -- my chart heart is drenched in wine. do we need a tiebreaker? congratulations, richard.

>> do remember, bloomberg users can engage with those charts using the function on the bloomberg. we have been trying to catch up on the analysis, what do we have? >> equity wise we are poised for a bull market. yields backing up in china, five basis points. the hang seng is up 2%, the last 60 minutes of the trading session is coming up. more market coverage is next. this is bloomberg. ♪

♪ >> it's almost 11:00 in singapore, 8:30 a.m. in mumbai. i'm haslinda amin. >> i'm rishaad salamat. we are entering the last hour of the morning session in hong kong, and these are our top stories. the benchmark is looking at its best day since january, the hang seng is heading for a bull market. >> but the mood is darkening in japan. a survey of investor sentiment was worse than forecast in march. as bothhe lira weekends sides claim victory in turkish local elections. the president is certain to lose control of the capital, o ankara.

this is "bloomberg markets." ♪ >> we are off to a solid start for the second quarter, no april fools joke. 2.3%, taking gains to more than 30% year to date. japan is up by 2.2%, hong kong on its way to bull market gains. south korea and singapore trailing. pmi numbers coming in stronger than expected, the strongest in seven years. the lighting about the global slowdown. byhave the renminbi higher .2%, less demand for the yen, less demand for haven play, weakening at 1.11.

take a look at where we are starting off. this is not exactly the chart we are looking for, but we are starting off with global stocks, the strongest in 10 years, we are talking about a potential rotation -- some of these markets like south korea and japan have been lagging behind and these are the markets we should be looking at. this quarter, look out for these markets. >> we are looking at the prospects of the indian trading day, just under 43 minutes ago. unchanging, and this is the story. we could see an all-time high for indian stocks and if we do follow the pattern of what's happening across asia at the .6% towe will move about

get a record on this market. with that in mind, let's get the first word news. >> theresa may's conservative party is planning for a potential snap election with just 12 days to go until the u.k. potentially crashes out of the european union. the house of commons will take control of brexit later monday, making a plan that could command a majority in parliament. the cabinet is divided, with some ministers calling for a hard split with no deal and others threatening to resign if that happens. there is been warned no money for populist spending plans, with growth grinding to a halt. the economy has expanded the percentage points less than eu peers for at least 10 years and will show no growth in 2019 even germany faces a slowdown. last month the eu said the enormous public debt and weakness threatened other countries in the region.

australian property prices continue their slide as tougher lending standards made it harder to update financing in some buyers delayed purchases until after the election. housing values dropped .7%, bringing a full to more than 8%. prices are now 14% lower than their peak from two years ago. has a suspect in the death of kim jong-un's half-brother. accused of using a nerve agent that kuala lumpur airport. it says he acted in collusion with north korean agents, tricked into thinking she was carrying out a prank for a reality tv show. global news, 24 hours a day on air and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm rosalind chin. this is bloomberg. >> thank you so much.

china's manufacturing sector is showing signs of a sharp turnaround, giving the impression that the overall economy is stabilizing. a private reading came in stronger than asked acted, under a positive picture painted by the official number over the weekend. it jumped the most in seven years. for more on the market impact, we are joined by our mliv editor. gangbusters, but we have brokerages downgrading more than 80 chinese companies. >> i think people have been fighting this rally the whole way. i think china will stay wrong ciders. all have shown improvement and that is also the highest since september when the trade war got going. all forecasts were beat and there is a clear consensus in the official and private data --

everything we are getting from china is showing that the global and economic outlook is improving. >> but that could be signs of overheating, hence the concern. >> i think there's going to be some concern throughout the rest are turningbut we to signs of overheating with only weeks of being convinced china is collapsing. everyone is determined to hate this rally. let's move away from china and have a look at what has been happening in turkey. we saw all the waves of the last crisis and now we have the turkish lira again under pressure. what is going on politically speaking which would be concerns for market? unfortunately, turkey will stay under pressure for a long period time. while it seems like i'm always bullish on china i am always

more cynical when it comes to turkey. ahead of a local election last week, liquidity caused short-term funding rates to rise above 1000%, up to 300%. that meant that foreigners got trapped in euro trades and couldn't get out end of the funding rates are coming back down. i think it has been tarnished for foreign investors and we will see many months of gradual lira weakness. no matter what happens with the election. the election results probably don't help because in the major cities, the coalition is losing support. margin of error is close in both sides are counting victory. it looks like they may be under threat. politics, andto morether big story,

shenanigans over the weekend and certainly on friday with theresa may going against once more. what is the pound pricing in? good question. we've heard an increasing number of eu officials saying that a no deal brexit is not priced into the market and i would definitely agree. i think there's a chance for a very large correction if we do get that worst-case scenario. the market is still largely complacent, i think believing that no one wants to go down that route, and it is worrying how the rhetoric is changing. the sterling is not pricing much at all because investors don't want to play this game. risk-reward, and there are very few stock positions in the options market which means when we get a spike in one direction -- overall most

traders just want to wait for the whole brexit fiasco to be over. >> mark cudmore, thank you so much for joining us. you can follow more on this story and all the jays trading on the bloomberg at mliv . you can get a market run down in one click from bloomberg's expert editors, so you can find out what is affecting your investment right now. >> let's show you what we have coming up this hour. bye-bye, a say. japan announcing a new era. we discuss what it means, and what it means for the country. ♪ next, curb your enthusiasm. why front managers are cautious about a global benchmark. this is bloomberg. ♪

♪ >> we are back with "bloomberg markets" in hong kong. i'm rishaad salamat. >> and i'm haslinda amin. onshoreyuan denominated bonds will be included in the bloomberg barclays global aggregate index on monday. the move is expected to attract billions of dollars into china's bond market, which is the world's third-largest. the increase of government thepolicy bank bonds into bloomberg barclays aggregate index will be a game changer for investors around the world, america, asia -- they are talking about capturing this opportunity. >> i think it would definitely be a game changer if that happens but the probability is difficult to judge. i think it would certainly add liquidity and great opportunity.

>> we know that there are -- as youhree indexes , you could drive up to $300 billion usd. some of the changes to the bloomberg barclays global aggregate. the parent company owns the index as you may have guessed. next guest thinks china stands out with high yields and low correlation with u.s. treasury's. let's bring in the investment manager for aberdeen standard investment, in shanghai today. thanks for joining us. i hear you have been very excited about this all coming to fruition. i'm going to bring up a chart which probably tells people why you have been excited. china's bond has outperformed in

the last year with the stimulus geo treasury total the global average is giving you nothing ultimately. that and ifbout that is why you are excited. >> thanks for inviting me. we are definitely excited. bondse dedicated china because we are so positive about the market. when we look at the year across the yield markets, the chinese market can offer investors is much higher. is the lowng correlation that the market provides. i think it provides a great diversification opportunity for whot of want investors previously have ignored this market for a very long time and i think bloomberg does help

getting investors involved. everybody is trying to guess how much money is likely to flow into this and at the moment only about 3% of the bond market is owned by foreigners, so tell us, you must have done some numbers on this. we are leaning on the more confident side and expecting $15 million to $100 billion, and we include that based on the chinese index but we do for see more to follow, sometime maybe , which would give more flows. probably more than $100 billion usd into the bond market.

bangme call it china's big , too big to ignore. how is this shift the global investment strategy? it is the largest bond market -- the third largest bond market and we think the unique characteristics of the bond market having such low it has ann, independent interest rate cycle and i think it will be really attractive for investors. i think they will be exploring the market this year. like to pose this question of the day to you, when will china's bond market he come a viable option for global reserve managers? what do you think? i think central banks have been investing in the chinese

renminbi market for a while now and we have seen the inflows since 2011-2012. i believe the current opening up of the market, investors can go in with this most recent addition and i think that will encourage more central banks to some have been asking us about the market and where to learn more and definitely we think the inclusion last year or it is goingago -- to encourage more reserve flows from the central bank and around the world. thate point i think is immigration alludes to that and we were asking yesterday how far this goes toward making the rmb international or the

internationalization of the currency. >> if you ask me about the impact this will have from opening up the bond market i think at the moment it might not be that significant. i think what we should focus on is the rules around repatriation , with new channels. i think it will be really positive for the renminbi. if you do invest in the china bond market and you do not like the currency there are hedging instruments available. >> ok. me, what about your portfolios that you have at the moment? how many will get inclusion of the bonds? it will be replicated by various asset managers, the ones who will be pouring money in.

if you get billions, some people talking about trillions, is there enough liquidity to support all of this? >> liquidity in the chinese government bond markets are not an issue. we get asked a lot about that, and there is no fore in the bond market each of bond issuance an outstanding size of 2 billion renminbi per month. you can definitely get enough volume done and this transaction is up to 100 million renminbi for chinese government bonds, so it is not an issue. i think investors who were not familiar with the market are not confident. >> historic confirmation.

aberdeen standard investment, thank you for your insight. still to come, japan ushers in a new era of order, piece, and harmony, and it is named raiwe i. this is bloomberg. ♪

♪ you are looking at live pictures out of japan, where the prime minister is speaking. japan has announced the name of thenew imperial era as world's oldest monarchy compares for a new emperor. you will succeed his father at the end of the month and his time on the throne will be known as raewa. let's look at to our bureau chief. this is a pretty secretive process.

tell us about the new name and what it signifies. >> absolutely. the whole process was wrapped in mystery. any of the names were leaked to the press as has happened decades ago, but the new name is with us. right now they are getting to their explanation about the meaning of the name. the two characters that are used in at would literally means something like decreeing harmony, order and peace. the characters selected from the oldest known japanese book of poetry from the eighth century. it is taken from the stands of that describes the soft wind of spring after the harsh wind of winter and how the blossoms of the flowers are able to bloom,

expressing hope that all japanese citizens will be able to bloom as well in this new generation. >> there's a new name for a new era, why? >> it's a tradition that dates back over a millennia. each new reign of the emperor, when the emperor ascends to the throne, comes with it this name. find to someone -- you could imagine, if you think of each generation, each decade or longer period, people associate these euros with these names of the emperor who was on the third of the time. how is the here and name

used? >> it is used all over the place, although perhaps we might see it starting to fade a little bit as it becomes more difficult in the digital era. your drivers license would have this name on it. newspapers would have that, any official document would usually have the name of the era instead of 2019. this year it would say haisei 1301, which is what we are in until the new era begins. >> are deputy bureau chief, thank you so much. a quick check of the business flash headlines. debt ridden chinese conglomerate hna has completed the sale of -- to our rj capital, the second major divestment in a week.

we are told that they value the group at about $2.8 billion. it is a hong kong-based private equity fund owned by a goldman sachs banker. hna has one of the biggest corporate stockpiles in china. repairing to tell investors how many cars they have built and sold, and that could be a surprising number. suggestsee rollout they could approach 80,000 vehicles, far higher than the average of 64,000. it represents more than $800 million of vehicles. >> and the world's largest oil producers have been vying for a u.s. dollar bond roadshow. saudi aramco's new offerings have already been raided a plus, with high production boasting low-cost and conservative financial profiles.

they released a detailed financial statements for the first time since its nationalization in the late 1970's. ♪ look at thee a numbers over the weekend, data coming out, which looks at more estimates, it beat the pmi had its biggest leap up with the psi 300 as we head to the lunch break, the shenzhen composite also gaining. we do have some of these concerns about economic growth in china, using because of evidence picking up. awaito have one market to phase two in about 15 minutes.

india should have a record high with the sensex, going up more than .6%. market action and a full roundup, next. ♪

♪ it's almost 11:30 a.m. in singapore, and we are in the middle of the trading day. asian stocks are higher, trying to factor a rebound that bodes well for the global economy. new export orders, the highest in six months, but joan to conclusions. pmi doesn't mean easing is over. let's get the first word headlines with rosalind chin in hong kong. >> thanks. sentiment among large manufacturers in japan fell the most in six years, adding to signs that weakening demand is hurting the already's buttering economy. confidence dropped in march from

19 in december, according to the bank of japan survey. sentiment remains positive, but hasn't risen since 2017. the concern about the impact of this year's tax rise. china says it will continue its policy of no tariffs on american auto and car parts. china removed retaliatory tariffs in a sign that it may have an end date for the suspension. the latest rounds move from beijing to washington this week. president trump has her. his threat to close the border with mexico, saying detention centers are full and the u.s. can accept no more illegal migrants. he said mexico must do more to stop people heading north, which the homeland security secretary says is causing "meltdown" on the border. the president tweeted that u.s. immigration laws could be fixed easily but that the democrats do not care about

crime. police in daca have arrested owners of a commercial tower that caught fire last week, killing 26 people. authorities say that the 22 story complex had no fire staircases and the upper floors had been illegally constructed. the owners have been charged with building code violations and may face culpable homicide. global news, 24 hours a day on air and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm rosalind chin. this is bloomberg. >> let's have a look at the dallas fed president, robert kaplan, who says he reckons that u.s. economic growth will be .75%, not and forecasting any changes to interest rates, particularly interest rate hikes. he spoke to kathleen hays in an exclusive interview. plot --n't in my dot

and i have been saying this for some time -- i didn't have any rate increases for 2019. it doesn't mean i couldn't change my mind. it means as i sat there in the march meeting, that was my base case for 2019, budget is always subject to change. what my main goal is for monetary policy, we are flexible want to see and i how growth is going to unfold for the next several months in 2019, and based on what i see -- and for me i look not only at the economy hard data, but at corporate earnings reports and a whole range of factors, particularly the fixed income markets, and based on all that, as we get later in the second quarter, i want to be flexible enough to have a policy to

move appropriately. i don't know where that will be at, but i think we are well-positioned to take the appropriate move based on how the facts unfold. >> what would be a trigger for you, to say it is time to think about cutting rates and pull the trigger? >> for starters, i have set our base case at the dallas fed is that gdp growth will be a little bit below 2%. confidence because we have been saying through 2018 that we thought it was going to slow meaningfully. it has turned out to be a little waser, but if there evidence to suggest that growth would undershoot that forecast -- there's a number of uncertainties. wecal stimulus is waning, have european growth decelerating, issues with china. a long list of uncertainties.

to believe growth prospects would be below that base case forecast, then i would start thinking about, what does that tell me about financial policy? what i have been saying for the last couple years is i don't think the fed should be restricted in monetary policy, but i also felt we are getting to the point through 2018 -- i'm not sure we need to be accommodative five. >> that was dallas fed president robert kaplan, speaking to kathleen hays. a couple lines to tell you about out of bangkok. we are here for the bank of thailand governor, saying that emerging-market currencies are moving in line. he is not concerned about the strength of it, as long as it is moving in line. also that firms should diversify their markets and export markets, and this is one market that is pretty much exposed to the u.s.-china trade war, and he

is trying to allay concerns, advising thai companies to diversify their export markets. let's bring in our bank economist to give us an assessment of the situation in southeast asia. no surprise from the bank of thailand governor. he's quite comfortable, it seems, with the strength. >> yes, he is. in fact, for the bank of thailand, what is more important than monetary policy is growth. slowing,growth is there's a strong case for tightening. >> but this is an export dependent economy and this is the strongest currency in asia, up about 2.2% year to date. surely at some point it will ease into growth. >> you look at the strength of the performance in the global

it is true that it wheres some sectors, exporters tend to face prices and it's a negative for thai exports. otherwise it affects competition. if i was in thailand with the elections, official results -- through what prism have your investors been looking at that? >> the thai election results have been pretty inconclusive and i would say that has clouded thailand's economic outlook. the problem is that it is not very clear which path will form the governing coalition. there is no stable outcome for a coalition to control both the lower house and the premiership,

if it is not clear that we will get. the thought is to hold back on spending, which could cause investment delays. we aree serendipitously, getting economic data out of thailand. cpi year on year was looking at 1.125%, the call slightly weaker. we have at the moment a very benign inflation background. how does that really play out with regards not just a monetary policy -- will we see more rate cuts? risk togures give more all this. it has been low for quite a while and with the bank of thailand, it is structural. they are not going to respond to

rate cuts, for example, it will be about the growth story that determines any move. tightening is off the table for most or all of the southeast could it bes, easy earlier in the rest >? i think it is a change of course in monetary policy in the region, and i think tightening is off the charts. in the case of indonesia we don't expect any more hikes. because the key inus is external stability, our view the current account deficit is coming for a more sustainable level before it unwinds. >> where are the risks? what is the biggest risk for indonesia? >> if you are talking about

monetary policy, the trade data -- the trade balance, we continue to see these numbers sustain the trend and then we could see the cut come earlier. i was just going to ask you, final question for me, what about the currency targets you have for southeast asia? which is likely to be the best performer, the worst? >> we like the indonesian rupiah over the peso. going to bey are cautious in terms of unwinding earlier rate hikes and in contrast we expect the philippines to cut interest rates quite aggressively. we have penciled in a cuts that will weaken. >> could there be any spillover

from what's happening in turkey? i think a lot of that would depend on what happens to the indonesian election results. if we look at markets historically they are quite intuitive. if the election is a career victory, it tends to be positive. a disputed result will be negative. thank you so much for your insight this morning. still to come, shanghai's much anticipated new tech board may be missing something. we go in search of unicom, next. this is bloomberg. ♪

♪ >> and that's the view of mumbai. we are still awaiting the opening of the markets, waiting for india to join the rest of

asia. for now, a quick check on the latest business flash headlines. a japanese cosmetics maker is tying up with alibaba. the venture would include product development and the first item due to be a shampoo that will go on sale in september.outside japan , the biggest consumer market is aiming to double its revenue to 15% of total sales by 2020. >> facebook has entered the growing debate about social media responsibility and internet regulation 10 days after choosing new zealand. the head of global affairs at facebook told bloomberg that regulators around the world should agreed on worldwide standards, rather than rules imposed in piecemeal fashion. asian governments are stepping up to drive away hate

sites and exclude -- australia introduced tough new laws to prevent what the government calls the weaponization of online platforms such as last month's live streaming of shooting in christchurch. singapore is drawing new regulations to halt the spread of fake news. the world's largest oil producers are hiring banks for a u.s. dollar bond roadshow, bond offerings have already been raided a plus due to high production, vast reserves, and conservative financial profile. it will force aramco to released detailed financial statements for the first time since nationalization in the late 1970's. >> let's take a look at the markets. will india join in the rally we are seeing across asia? it is still about 20 or 30 seconds to go before the open. markets are pointing -- futures

pointing to a higher open, up by .5%, and in stocks upgraded to overweight. b.n.p. paribas, another reason why we should be seeing that rally when india opens later on. shanghai has a tech board xiaomi, butcreate our columnist says it is conspicuously short of some big names. companies upnine for listing, through the companies which have been vetted. tell us why you are so pessimistic. they are companies -- are not exactly famous chinese tech names, and this is the

problem. how many people have heard of those nine companies that have been vetted? and a lot of people are thinking maybe there won't be any famous names, which is a big problem. where's the next xiaomi, tencent? where are the tech companies we are always talking about? it could be early days but so far the regulators are playing it safe. >> why would then the chinese tech firm -- what are the incentives to list on this new exchange? >> last year hong kong changed the rules -- a founder could keep an uneven voting share in the company and also they allowed unprofitable companies to list.

unprofitable companies can list -- you can also control an inordinate amount of the company when it lists, which tech firms love. the third is pricing. you can in china traditionally times 23 price-earnings. this one, there is no limit. maybe if they list they can get that trade. >> it does some like you are not very hopeful for the shanghai tech board, but the regulators came out to say that maybe it's a matter of time, you have to be patient. and there are lots of tech companies who would think, wait a minute, there are all sorts of issues at home. my international accounting -- and another thing

is foreign currency. if you list in china you will get your money out of the country. plus you have the prying eyes of beijing. >> bloomberg opinion columnist nietzsche goble on, thank you for your views. taking a look at the turkish lira, as turkey wakes up to the trading day we are seeing the lira depreciating 1% versus the dollar pretty much expected given what has conspired over the weekend. losing several andes, including on kara, we are seeing the turkish lira depreciating 1% versus the dollar. >> let's have a look at the indian markets, a very crucial day, new record highs, and it would be something after an abysmal two months.

nearlyseeing the sensex .6% above the gain line. toneeds to be .6% or above hit the record and that's the position we have. the bulls are salivating at the prospect of more gains, chinese stocks have been piling back in as we get this upgrade coming through from bnp par above. that is what it looks like. this is bloomberg. ♪

♪ >> you are back with "bloomberg markets." i am rishaad salamat. >> i'm haslinda amin. returning to one of our bigger stars of the morning, the uber denominated onshore bonds will be included in the bloomberg barclays global aggregate index on monday.

ahead of jpmorgan china says the country could see up to $300 billion of annual inflows as the bond market opens up. speaking exclusively to bloomberg, the ceo says the fed in the trade war or the biggest threats to chinese markets. >> this is one of the two biggest markets we have this year. also of course the u.s. china trade discussion negotiations, the biggest market movers. for the fed we need to look at global growth first. apparently the stubbornly slow growth and inflation has been a concern across markets, and the fed will probably give it to their strategies on the back of what they call the average

inflation. >> what does a more dovish fed been for china? --being a global currency when you look at trade you look at every aspect and for emerging markets, a more dovish environment is great for china to observe this determined path of -- >> the constant question is whether they are getting the balance right. what are you looking at that would tell you debt levels are becoming dangerously high? >> we see the debt to gdp ratio going shorter rather than higher, and it probably will. honestly, personally, it's a great development. .e can get the market >> going in the right direction. at what point does it start to level up with what we've seen? what is the timeframe? >> we still see massive growth

first the gdp in china, and when we take a quick -- it tellseconomy, us the bond market is underdeveloped. >> and the inclusion of china on the index, the impact of that will be what? >> we know there are probably three indexes -- if you look at , the inflow could drive up to $300 billion. talking topmorgan tom mackenzie. let's take a look at what has been happening. year on year declines, let's have a look ahead to those numbers. our asia consumer reporter is with us. how much of a drop or analysts expecting? survey we did, a

they were expected to drop 3%. that iney also shows april it will continue to further decline. it's very interesting that we beat to surveys every month among the analysts, one at the start of the month and the other at the months and. in the last three months we are seeing that the months and estimates are bigger than the initial estimates, which were already weak. >> you talk about weakness, where will we see the weakness? >> the vip will continue to be very key to the total revenue actually thend

reason is still the same compared with the last two months, which is that the uncertainties in china's economics and the trade war. morninglly saw this that shares are going really good after china announced the stability of the latest macroeconomic data. we should see clearly that we will have some effects to the real economy. we are continuing to see that from april as well as the next two months -- casino revenue continued to show weakness. >> let's talk a little bit about what's happening. certainly it is competitive in haveegion, and we also more non-gaming revenue. where are we? >> you are hitting the point.

macau is facing more fierce competition among other asian hubs like the philippines, the amount, and cambodia. operators are bringing away more vip gamblers to other casino hubs. thing is to the big attract more mass-market thaters and tourists so they can have more attraction to drive the momentum. guess we will have these numbers are the top of the hour. our asia consumer reporter. taking a look at the offense we are looking at, we have australia's budget coming up, the election happening on tuesday. the vice premier of china returning to washington for a

trade talks. you can also look out for friday, arguably the most important data point of the month, nonfarm payrolls on friday. ♪ riday. ♪

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